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Feedback analysis of population, economy and pension: Moderate scale of China’s pension strategic reserve

Author

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  • Tang, Yunshu
  • Ruan, Yaoyun
  • Xu, Yongqing
  • Li, Yaokuang

Abstract

This paper puts the population, economy and pension into a unified framework, analyzes the interactive feedback mechanism between them, and builds a system dynamics model to explore the moderate scale of China’s pension strategic reserve from the following three perspectives: whether it can resist the pension payment crisis in future according to the current growth rate; if the pension gap is completely filled by the reserve, what size of the reserve needs to reach; a moderate range of the reserve when local governments are jointly responsible for filling the gap. The empirical research shows: the reserve cannot resist the pension payment crisis; the reserve needs to reach 54.21 trillion RMB before the gap appears, under the condition of fully filling the gap; the reserve needs to reach the range of 19.96 trillion to 39.51 trillion RMB before the gap appears with the participation of local governments.

Suggested Citation

  • Tang, Yunshu & Ruan, Yaoyun & Xu, Yongqing & Li, Yaokuang, 2020. "Feedback analysis of population, economy and pension: Moderate scale of China’s pension strategic reserve," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 551(C).
    • Handle: RePEc:eee:phsmap:v:551:y:2020:i:c:s0378437119322368
    DOI: 10.1016/j.physa.2019.124043
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    References listed on IDEAS

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    1. Juan Yermo, 2008. "Governance and investment of sovereign and public pension reserve funds in selected OECD countries," OECD Journal: Financial Market Trends, OECD Publishing, vol. 2008(1), pages 133-161.
    2. repec:wbk:wbpubs:7336 is not listed on IDEAS
    3. Giam Cipriani, 2014. "Population aging and PAYG pensions in the OLG model," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(1), pages 251-256, January.
    4. P. R. Lane, 2001. "The National Pensions Reserve Fund: Pitfalls and Opportunities," Trinity Economics Papers 20017, Trinity College Dublin, Department of Economics.
    5. Juan Yermo, 2008. "Governance and Investment of Public Pension Reserve Funds in Selected OECD Countries," OECD Working Papers on Insurance and Private Pensions 15, OECD Publishing.
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